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TMI Blog2017 (5) TMI 773X X X X Extracts X X X X X X X X Extracts X X X X ..... ikanal and had filed a return in response to notice u/s 148 of the Act, this very action alone would not strengthen the reasons recorded by the ld AO and confer him power to frame the reassessment. Though the assessee based on mistaken understanding of provision of Income Tax Act had filed the return in response to notice u/s. 148 of the Act disclosing capital gains and claiming exemption us 54F of the Act for the assessment year 2007-08, that mere act alone could not be treated as a reason fastening unwarranted tax liability by the assessee for the year under appeal. It is well settled that there is no estoppel against the statute and reliance in this regard placed on the decision in the case of Maynak Poddar (HUF) Vs. WTO [2003 (2) TMI 45 - CALCUTTA High Court] is very well founded. Thus we deem it fit and appropriate to admit the additional grounds raised by the assessee as it goes into the root of the matter and does not involve any investigation of facts in the light of the decision of National Thermal Power Corporation Ltd. (1996 (12) TMI 7 - SUPREME Court ). The re-assessment framed by the Ld. AO for the assessment year 2007-08 is not sustainable in law. - Decided in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s. 148 of the Act after recording reasons for re-opening the assessment. In response to said notice, the assessee filed return of income disclosing capital gain among other incomes and also claiming exemption u/s. 54F of the Act in respect of re-investment in entire property. Re-assessment was completed by the Ld. AO denying the claim of exemption u/s. 54F of the Act thereon by assessing the capital gains in respect of the sale of property. The primary facts in the instant case are that the assessee purchased the property measuring about 2 grounds and 1412 sq.ft. at Sri Kapaleswar Nagar, No. 145, Shrotium Neelankarai Village, Tambaram Taluk, Kancheepuram District bearing Survey No. 92/2A vide sale deed dated 31.08.1994 registered as document No. 3655/1994. The assessee executed Power Of Attorney (POA) in favour of M/s. K2 Engineers Pvt. Ltd., on 15.12.2006. The copy of the said POA was placed on record vide page 25 of the paper book. The assessee received the sum of ₹ 1,60,00,000/- as advance from M/s. K2 Engineers Pvt. Ltd., in December, 2006. The assessee did not enter into any agreement of sale in writing pursuant to execution of POA on 15.12.2006. From the perusal of va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of agreement of sale in writing and by handing over possession of the subject mentioned property so as to fall within the ambit of provisions of section 53A of Transfer of Property Act. He also placed reliance on the decision of the Hon'ble Supreme Court in the case of Suraj Lamp and Industries Pvt. Ltd., Vs. State of Harayana entered in SLP (C) No. 13917/2009 dated 11.10.2011, reported in (2012) 340 ITR 1 (SC), wherein after analysing the relevant provisions viz. section 5 and section 53A, 54 and 55 of Transfer of Property Act, together with section 17 of Registration Act, 1908 had held as follows: It is thus clear that a transfer of immoveable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immoveable property can be transferred. 12. Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of sections 54 and 55 of TP Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nor create any interest in an immovable property. They cannot be recognized as deeds of title, except to the limited extent of section 53A of the TP Act. Such transactions cannot be relied upon or made the basis for mutations in Municipal or Revenue Records. What is stated above will apply not only to deeds of conveyance in regard to freehold property but also to transfer of leasehold property. A lease can be validly transferred only under a registered Assignment of Lease. It is time that an end is put to the pernicious practice of SA/GPA/WILL transactions known as GPA sale/s. 17. It has been submitted that making declaration that GPA sales and SA/GP A/WILL transfers are not legally valid modes of transfer is likely to create hardship to a large number of persons who have entered into such transactions and they should be given sufficient time to regularize the transactions by obtaining deeds of conveyance. It is also submitted that this decision should be made applicable prospectively to avoid hardship. 18. We have merely drawn attention to and reiterated the wellsettled legal position that SA/GPA/WILL transactions are not 'transfers' or 'sales' an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ped assessment and accordingly, the re-opening of assessment is bad in law. 4. In response to this, the Ld. DR argued that admittedly the re-opening in this case had happened pursuant to the information received by the ld. AO from the Registration Department. In the instant case, both POA as well as the sale deeds were duly registered with the Registration Department though on different dates filed in two different assessment years and accordingly he argued that income in the hands of the assessee had escaped assessment. He argued that it is already well settled with sufficiency of reason need not be taken into account at the time of recording the reasons for assessment. He further argued that the decision rendered by the Hon'ble Supreme Court in the case of Suraj Lamp (Supra) is only in the context of general law and could not be made applicable for income tax proceedings. 5. We have heard the rival submissions and perused the materials available on record including the paper book filed by the assessee. We find that the assessee had filed the return of income in pursuant to notice issued u/s. 148 offering capital gain on sale of the subject mentioned property and claimin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold property measuring about two grounds and 1412 sq.ft. at Sri Kapaleeswarar Nagar, No. 145, Shrotrium Neelankarai Village, Tambaram Taluk, Kancheepuram District, bearing survey No. 91/2A for a sale consideration of ₹ 1,60,00,000/- on 15.12.2006 to M/s. K2 Engineers P. Ltd., Chenna-41. The assessee has not disclosed the capital gains arising out of the sale of the above said property made to M/s. K2 Engineers P. Ltd. We have already seen based on the arguments of the Ld. DR that re-opening admittedly in this case had happened based on AIR information obtained by the Assessing Officer from the Registration Department. It would be pertinent to look as to what information could have been provided by the Registration Department in the instant case. The Registration Department could have at best provided only the POA executed by the assessee on 15.12.2006 registered as Doc. No. 2537/2006 at book -IV in the office of Sub-Registrar, Neelangarai and copies of registered sale deeds executed by the assessee in favour of four different invoices on 31.10.2007 and 30.05.2008 registered as Doc. No. 5532/2007; 5538/2007; 2230/2008 and 2231/2008. Admittedly, no consideration figure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Moreover, the Assessing Officer has failed to take into consideration that as per notification No.857(E) the limit for investment in plant and machinery for SSI units manufacturing drugs and pharmaceutical products was ₹ 3.00 crore and as per notification No.655(E) with effect from 5th June, 2003 such limit has been increased to ₹ 5.00 crore. Therefore, the assessee remained an SSI Unit for the years under consideration. In the aforesaid premises, it is evident that the Assessing Officer has proceeded on an erroneous assumption that the respondent assessee does not meet with the requirement of an SSI unit when the record clearly points out to the contrary. Under the circumstances, it is manifest that based upon the material on record on the basis of which the Assessing Officer sought to reopen the assessment, he could not have formed the belief that the assessee did not meet with the requirements of an SSI unit and consequently could not have formed the requisite belief that income chargeable to tax has escaped assessment. In the absence of having any reason to believe that income chargeable to tax has escaped assessment for the assessment years under consideration, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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